Where Do I Get a Sales Tax ID Number?

by Charmayne Smith, Demand Media

The IRS issues the sales tax ID number.

tax time image by Gale Distler from Fotolia.com

The sales tax ID number is also known as the federal tax identification number. The U.S. Internal Revenue Service refers to this number as the Employer Identification Number, or EIN. This number is used to identify your business entity, as well as to track your business’ taxation responsibilities. The number is not required for all businesses but every business has the option of obtaining one.

IRS

The employer identification number is only issued by the IRS. The number is used to identify your business as you pay taxes. You will include this number on your quarterly and annual tax documents and payments. It is also included on identifying employee information, such as employer-issued 401k information and W-2s.

Requirements

Not every small business requires an EIN number. If you have registered your small business as a sole proprietorship, you will only require an EIN in certain circumstances. If your small business has employees, a Keogh plan or withholds taxes on wages paid to a non-resident alien, it requires an EIN. You will also require an EIN for your business if you file, or intend to file, alcohol, tobacco and firearms tax returns, employment returns or excise tax returns. Furthermore, the IRS requires your business to obtain an EIN if your business engages in any activities involving trusts, estates, mortgage investments, nonprofit organizations, farmer’s cooperatives or plan administrations.

Application Process

The EIN application process is a relatively easy and is always free of charge. The IRS encourages people to use the online application. Once you complete the online application, your information is immediately validated and your EIN is issued. Although it takes up to four weeks for your information to be permanently included in the database, you can use your EIN immediately upon issuance.

Along with the online application, businesses can also apply via telephone, fax and mail. The telephone application is completed with an IRS representative in the Business &amp; Specialty Tax Line. Once your application is complete, the representative validates your information and issues your new EIN. Unlike, the online and phone applications, the fax and mail options require businesses to complete IRS Form SS-4: Application for Employer Identification Number. Fax and mail applications can take up to five weeks for processing, validation and issuance.

Updating

As your small business evolves, you may make certain changes that affect your EIN’s information. Changes in location, responsible party and business name can affect the validity of your EIN. Therefore, you must inform the IRS of those changes. The IRS requests that you send a letter, on your business letterhead, explaining the changes that have occurred. This is no form to complete. The IRS will send a confirmation once the information has been updated. This process can take up to 60 days.

DUNS

It is important that you recognize the difference between an EIN and a DUNS number. Although the EIN number is used to report and pay taxes to the IRS, it is not used to establish credit for your business or to report your credit history to the credit bureaus. The DUNS number, issued by Dun &amp; Bradstreet, is the number that is used for credit purposes. Although these numbers are separate, they are both required to establish government contracts and other business relationships.

About the Author

Writing professionally since 2004, Charmayne Smith focuses on corporate materials such as training manuals, business plans, grant applications and technical manuals. Smith's articles have appeared in the "Houston Chronicle" and on various websites, drawing on her extensive experience in corporate management and property/casualty insurance.

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